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6
C H A P T E R
Managing Quality
DISCUSSION QUESTIONS 5. Deming (14 points, leadership and training; good workers
cannot overcome bad processes), Crosby (Quality is Free—the
1. Higher quality leads to greater demand, greater market share,
cost of poor quality is underestimated), and Juran (top manage-
and greater economies of scale. In addition, higher quality leads to
ment involvement in quality is vital).
less scrap, rework, and warranty cost, hence to less input required
for the same output. AACSB: Reflective thinking
LO 6.1: Define quality and TQM 6. The seven tools of TQM are:
AACSB: Reflective thinking Check sheets
Scatter diagrams
2. The criteria are a set of questions about seven critical aspects of Histograms
managing and performing as an organization: Pareto charts
1. Leadership Flowcharts
Cause-and-effect diagrams
2. Strategic planning Statistical process control charts
3. Customer focus LO 6.1: Define quality and TQM
4. Measurement, analysis, and knowledge management 7. If there is fear, people will not bring up problems. If there is
5. Workforce focus no pride in work, there is no motivation. If management does not
6. Operations focus lead by example, why should employees care?
7. Results AACSB: Reflective thinking
Source: 2013-2014 Criteria for Performance Excellence, http:// 8. A university can seek to control the quality of its graduates by:
www.nist.gov/baldrige/publications/archive/2013_2014_business Setting specific goals for its overall accomplishments
_nonprofit_criteria.cfm Employing quality faculty
AACSB: Information technology Setting appropriate standards (prerequisites, GPA, required
credit hours, etc.)
3. Of Deming’s 14 points, “finding problems” is certainly one of Employing appropriate evaluation devices (quizzes,
the three. The selection of the other two is not as clear-cut. Many examinations, term papers, etc.)
would say “reducing fear” is important, but its purpose is really to
AACSB: Reflective thinking
find problems. The first point, on getting management to put forth
common goals and stick with them—“constancy of purpose”—is 9. Philip B. Crosby believed that quality is free because, on bal-
our second choice. The third is “methods”—not giving goals ance, the quality (doing things right the first time) costs only a frac-
without providing the methods to achieve them. tion of the benefits. The cost of poor quality is vastly understated,
which makes good quality free.
LO 6.1: Define quality and TQM
AACSB: Reflective thinking
AACSB: Reflective thinking
10. Quality robustness, quality loss function, and target-oriented
4. Seven concepts for an effective TQM program: continuous quality.
improvement, Six Sigma, employee empowerment, benchmark-
LO 6.5: Explain quality robust products and Taguchi concepts
ing, just-in-time, Taguchi concepts, and knowledge of TQM tools.
The 14 points were Deming’s way of showing how he implement- 11. A Pareto chart’s purpose is to identify the critical problems
ed TQM. and separate them from the less important ones.
LO 6.1: Define quality and TQM LO 6.6: Use the seven tools of TQM
AACSB: Reflective thinking AACSB: Reflective thinking
12. Ishikawa “causes”: material, machinery/equipment, methods,
and manpower.
LO 6.6: Use the seven tools of TQM
13. Inspect at your supplier’s plant while the supplier is produc- Do#s th# doorman gr##t #ach gu#st in l#ss than 30
ing, inspect at your facility upon receipt of goods from your suppli- s#conds?
er, inspect before costly or irreversible processes, inspect during the Do#s th# front d#sk cl#rk us# th# gu#st’s nam# during
step-by-step production process, inspect when production or service ch#ck-in?
is complete, and inspect before delivery from your facility; all work Is th# bathroom tub and show#r spotl#ssly cl#an?
well in manufacturing. Inspection at point of customer contact does How many minut#s do#s it tak# to g#t coff## aft#r th#
not. gu#st sits down for br#akfast?
AACSB: Reflective thinking Did th# wait#r mak# #y# contact?
14. The design and delivery of service can make a difference in W#r# Minibar charg#s post#d corr#ctly on th# bill?.
the tangible components of service, containing the determinants of #stablish#d standards, aggr#ssiv# training, and insp#ctions
service quality in the process design, managing expectations, and ar# part of th# TQM #ffort at th#s# hot#ls. Quality do#s not
having alternate plans for exceptions. happ#n by accid#nt.
AACSB: Reflective thinking
15. Source inspection: consistent with the concept of employee There are 189 total e’s, each identified by a # sign: 3 are in
empowerment, individual employees self-check their work and the title, 18 in the 1st paragraph, 62 in the 2nd, 50 in the 3rd, and
verify the work of the employee preceding them. 56 in the list and last paragraph.
AACSB: Reflective thinking
16. According to Berry, Zeithaml, and Parasuraman, the 10 ETHICAL DILEMMA
determinants of service quality are: The ethics issue here is certainly less clear than some of the
Reliability equally prominent situations that have arisen in the past few
Responsiveness decades. Some of these are:
Competence The asbestos litigation of 2003 cost over $200 billion and
Access put nine defendants out of business.
Courtesy Firestone discounted sales of defective tires to the south-
Communication eastern U.S. and recalls of 13.5 million tires cost $200
Credibility million.
Security A.H. Robins’s Dalkon Shield intrauterine device (IUD)
Understanding/knowing the customer resulted in 18 U.S. deaths and 11,000 lawsuits. It forced
Tangibles Robins into Chapter 11 bankruptcy reorganization. Searles’s
17. If one adopts a definition of quality based upon “satisfying similar product, the Copper 7, was pulled from the U.S.
stated or implied needs,” it is difficult to imagine any product that market and then sold overseas.
would not be required to be of high quality. Is McDonald’s at fault? Students can do a Web search and find
AACSB: Reflective thinking numerous articles on these lawsuits. It appears that the company
18. Counting the number of e’s in the OM in Action box: should have had a presumption of danger to customers from
the scalding hot coffee. However, “good” coffee is apparently
RICH#Y INT#RNATIONAL’S SPI#S prepared with very hot water.
How do luxury hot#ls maintain quality? Th#y insp#ct. But See the text discussion regarding perspective of quality: User
wh#n th# product is on#-on-on# s#rvic#, larg#ly d#p#nd#nt on based (quality is in the eyes of the beholder); manufacturing based
p#rsonal b#havior, how do you insp#ct? You hir# spi#s! (quality conforms to standards); and product based (quality is
Rich#y Int#rnational is th# spy. Pr#f#rr#d Hot#ls and precise and measurable).
R#sorts Worldwid# and Int#rcontin#ntal Hot#ls hav# both
hir#d Rich#y to do quality #valuations via spying. Rich#y
#mploy##s posing as custom#rs p#rform th# insp#ctions. ACTIVE MODEL EXERCISE (AVAILABLE IN MYOMLAB)
How#v#r, #v#n th#n manag#m#nt must hav# #stablish#d what
th# custom#r #xp#cts and sp#cific s#rvic#s that yi#ld custom#r ACTIVE MODEL 6.1: Pareto Charts
satisfaction. Only th#n do manag#rs know wh#r# and how to 1. What percentage of overall defects do the room service com-
insp#ct. Aggr#ssiv# training and obj#ctiv# insp#ctions plaints account for?
r#inforc# b#havior that will m##t thos# custom#r 72%
#xp#ctations. 2. If we could reduce the room service complaints in half, how
Th# hot#ls us# Rich#y’s und#rcov#r insp#ctors to #nsur# does this affect the chart?
p#rformanc# to #xacting standards. Th# hot#ls do not know The bar for room service is cut in half. The cumulative
wh#n th# #valuators will arriv#. Nor what alias#s th#y will curve begins lower and has a steeper build.
us#. Ov#r 50 diff#r#nt standards ar# #valuat#d b#for# th#
insp#ctors #v#n ch#ck-in at a luxury hot#l. Ov#r th# n#xt 24
hours, using ch#ck lists, tap# r#cordings, and photos, writt#n
r#ports ar# pr#par#d. Th# r#ports includ# #valuation of stan-
dards such as:
12
11
10
x
0 1 2 3 4 5 6 Trips
Location: 2nd
Time of Day
and Forrester
Poor Driving
Habit 7:00–7:20 A.M. 10:00–10:20 A.M. 5:00–5:20 P.M. 7:30–7:50 P.M. Total
Running light 14
Speeding 13
No turn signal 8
Failure to yield on 8
left turn
No stop when 8
turning right on red
light
Blocking 10
intersection on red
Honking horn 12
when light turns
green
Not observing light 6
when it turns green
Turning from 2
wrong lane
Appear to go 4
through light but
stop suddenly
Other 11
(b) The check sheet results can be sorted into a descending Running light 14
frequency table. Speeding 13
Honking horn when light turns green 12
Other 11
Blocking intersection on red 10
Failure to yield on left turn 8
No stop when turning right on red light 8
No turn signal 8
Not observing light when it turns green 6
Appear to go through light but stop suddenly 4
Turning from wrong lane 2
A Pareto chart like the one shown below can illustrate the major habits that dominate the behavior. Note: A classic
Pareto chart would also include a cumulative probability line.
Freq. of Occurrence
6.8 Cause-and-effect diagram (also known as a fishbone chart or an Ishikawa diagram) for a dissatisfied
airline customer:
Material Machinery
Food cold Poor or no food Seats Seats are
uncomfortable too close
Tickets too Not enough Seats are like Need larger
expensive handicap access rocks restrooms
Overpriced food Not enough Reading light A/C not
at airport parking not working blowing cool air
Dissatisfied
customer
Security Lost luggage Need more
lines are awful attendants
Plane was late Dirty Not enough Rude attendants
bathroom ticket agents
Poor connections Not enough
traffic police
Methods Manpower
6.10 Student answers will depend upon how broadly they define
“registration.” (Is fee payment included? Is academic advising
included?) Manpower issues might include rudeness, lateness,
missing appointments, incompetence. Methods issues might
include excessive red tape, tasks that don’t make sense, rules that
contradict one another, rules that are impossible to interpret or
implement, low enrollment caps on classes, administrators that are
inflexible with exceptions. Machinery issues might include regis-
tration computers that are slow or broken, printer issues, etc.
Material issues might include too few classes at selected hours,
forms that can’t be found, etc.
6.11 A potential chart might look like that shown below. Each
student will brainstorm different bones in the chart, depending on
the particular experiences and systems of the situation.
6.12 6.13
(a)
Manpower Machines
Temperature
Inadequate controls off Antiquated
Incorrect cleanup scales
Variability
measurement Technician
Equipment
Operator calculation off Inadequate
in disrepair
misreads display flow controls
Incorrect
Formulation
Jars Lack of clear
Incorrect
mislabeled instructions
Damaged maintenance
Incorrect raw material Priority Inadequate instructions
weights miscommunication
Materials Methods
6.17 Conversion of data into percentages in the first step: (c) Fishbone diagram. Note that not at all of these are
45 easily assigned to a specific M. “Fear or dislike of flying”
Cramped seats = .087 may be Machinery, Material, Manpower, or Methods
519 (the way the passenger is treated).
16
Cost = .031 Machinery Methods
519
Fear
57 Seats Security
Dislike/fear flying = .110 Fear Connections
519 Overcrowding Late
planes/waits Lost luggage
119 Flying
Security = .229 dislikes
519 Service Cost
12 Fear
Poor service = .023 Fear Food
519
8 Manpower Material
Connections = .015
519 (d) Start with most frequent complaints from the Pareto
chart over which you have control as the manager of the
42
Overcrowded planes = .081 airline: late planes, cramped seats, and overcrowding.
519 These comprise about 28% of the dislikes. Security is
57 mostly outside an airline’s control.
Late planes/waits = .110 6.18* The idea is to inspect six shirts or blouses for poor stitching,
519
misaligned seams, errors in buttons or buttonholes, collar alignment,
7 etc., and indicate the problems on a shirt template.
Food = .013
519 6.19*
7
Luggage = .013
519
51
Other = .098
519
Note that each person had only one complaint.
(a) The above dislikes total to .81, or 81%. So 19% stated
no dislikes. (This represents 98 responses.)
[So 519 – 421 = 98/519 = 19%.]
(b) Pareto chart:
6.20*
CASE STUDY
SOUTHWESTERN UNIVERSITY: C
1. There are lots of ways to analyze these data. We suggest getting
the student to begin by considering the tools of TQM and go from
there. Here we have weighted these survey data (from Table 6.7)
with 4 for good and 0 for poor in Table 1 below and then ranked
them. This approach yields the data in descending order (Poor to
Good) in Table 2. Then we take the open-ended questions and look
at both the positive and negative responses (Table 3). Then we rank
these in descending order (most negative to least negative).
Entertainment 8 14 Seats —
3 Student Behavior 9 Parking —
2 Crowded 5 Need Sky Boxes —
1 Cheerleaders 5 Other 1
1 Programs 2 Bathroom —
Band 1 1 Traffic —
Coach 3
Food
3 Access/Variety —
1 Quality 1
1 Price —
Seats 14
Parking 9
Need Sky Boxes 5
Other Facilities 5
Student Behavior 3
Access/Variety 3
Crowded 2
Bathrooms 2
Cheerleaders 1
Programs 1
Traffic 1
Quality 1
Price 1
Band
Coach
Note how the survey results differ between the survey and open- 3. The next step is to improve quality by beginning improvement
ended comments. Parking, for instance, comes in second on the with the high-frequency item on the left of the Pareto chart for the
open-ended comments, but with the weighting scheme it is near open-ended negative responses (see Figure 2).
the bottom (Table 2). Bathrooms were not included on the survey Figure 2: Pareto Chart Results for S.W.U.
questions, but show up on the open-ended comments. Different
methodologies often yield different results. Fishbone analysis
appears in Figure 1.
LO 6.6: Use the seven tools of TQM
AACSB: Analytical thinking
2. The survey could have been segmented by faculty, alumni,
guests, and students for an added perspective on quality.
AACSB: Reflective thinking
The patient’s assessment of health care quality may drive where Empowered employees
the patient goes the next time services are needed. Patient LO 6.1: Define quality and TQM
complaints may drive an entire medical practice (for example, a
AACSB: Reflective thinking
group of 20 OB/GYNs) to send all their patients to a competing
hospital. Patients cannot accurately judge all aspects of their 3. What techniques does APH practice in its drive for quality
medical care, or the care of their child, but they can certainly and continuous improvement?
judge cleanliness, comfort, response times, food, appearances of Uses benchmarking very effectively.
competence, staffing shortages, politeness, billing errors, bed wait Employs an executive “dashboard” scoreboard to keep
times, etc. track of major indices of quality.
LO 6.1: Define quality and TQM A 24-hour hotline system for patients to reach administra-
tors to report problems.
AACSB: Reflective thinking
Carefully selects and trains its employees and imbues them
2. How would you build a culture of quality in an organization with the hospital’s quality credo.
including APH? Empowers employees at all levels to deal with problems of
To build a culture of quality in a hospital you need (see Figure 6.2 quality immediately (providing up to $200 in gifts to
for a model to build on in class): satisfy patients/customers).
Organizational practices: Makes extensive use of the tools of quality described in
Leadership: Top-down support for a total quality manage- this chapter, especially Pareto and process charts.
ment plan. LO 6.4: Explain how benchmarking is used in TQM
Staff support: Good hiring policies that only select the best LO 6.6: Use the seven tools of TQM
skilled, warmest, most caring, reliable staff.
AACSB: Reflective thinking
A quality plan that is part of the overall strategic plan for
the hospital. 4. Develop a fishbone diagram illustrating the quality variables
Quality principles: for a patient who just gave birth at APH.
Quality standards that can be published, measured, and
compared.
Customer focus: Procedures to review patient quality care.
2 QUALITY COUNTS AT ALASKA AIRLINES How important is every Customer to our future? Our Finance
The 6-minute accompanying video is available in MyOMLab. Department reports that our break-even Customer per flight in
1994 was 74.5, which means that, on average, only when Customer
1. Alaska Air does have some measure of control over ground
#75 came on board did a flight become profitable.
operations even though the entire effort is outsourced to Menzies
Aside from that statistical data, let me share with you a down-
and its 500 “ramp agents.” First, as the case notes, the metrics are
to-earth formula devised by our Dallas chief pilot, Ken Gile. It
detailed, measured, and analyzed, and targets are clearly estab-
utilizes our annual profit and total flights flown to clearly illustrate
lished. There are rewards for outstanding performance (3.7%
how vital each Customer is to our profitability and our very
bonus) and penalties (up to 5%) for poor performance. Second,
existence.
although the ground personnel are not their employees, Alaska
When you divide our 1994 annual profit by total flights flown,
maintains first-line supervisors on the premise, working with
you get profit per flight
Menzies and treating its ramp agents as equals. Third, Alaska runs
daily reporting sessions to monitor performance continually. $179,331,000 (annual profit)
Finally, the subcontractor has every incentive to keep Alaska hap- = $287 (profit per flight)
624,476 (total flights flown)
py by hiring, training, and retaining quality employees. It provides
the same services for Alaska at many other airports. Losing credi-
Then, divide per flight by Southwest’s system-wide average
bility in the Seattle operations can have implications beyond the
one-way fare of $58:
one airport. Plus Menzies provides ground operations for Jet Blue
and Virgin, among other airlines.
$287 (profit per flight)
LO 6.6: Use the seven tools of TQM = 5 (one-way fares)
$58 (average one-way fares)
AACSB: Reflective thinking
2. Other quality metrics could include number of lost bags, The bottom line, only five Customers per flight accounted for
number of damaged bags, on-time ramp crews, carts/tugs/belt our total 1994 profit!
loaders in proper places on tarmac, crew always behind the safety
Source: Freiburg, Kevin, and Jackie Freiburg, “Nuts! Southwest Airlines’
lines, no foreign objects on roadways, tow-bars (which tend to be Crazy Recipe for Business and Personal Success,” Bard Press, 1996, p. 120.
misplaced and end up at other airlines) all accounted for.
LO 6.6: Use the seven tools of TQM 1. The Ritz-Carlton can monitor quality in the short run
by customer feedback. Questionnaires in the room, follow-up
AACSB: Reflective thinking letters and phone calls by independent services, tracking com-
3. What could an airline have done to accommodate a student’s plaints, and ultimately by occupancy rates. There are, of course,
complaint? (1) An instant text with information to keep the objective measures in many aspects of hotel operations. These
customer informed—as Alaska did in the case study. (2) A free include room cleanliness, quality of food, accuracy of billing, and
meal or hotel voucher. (3) Frequent flyer points. (4) Help from reservations.
ground staff. (5) Immediate money to replace lost clothing and AACSB: Reflective thinking
bags. (6) Constant updates from the pilots or ground supervisor
advising the reason for delays. 2. For companies that expect quality to be more than a slogan we
suggest they follow the ideas of the text:
AACSB: Reflective thinking
A philosophy of continuous improvement
4. Using the table in the case:
Employee empowerment
93.2% of flights scanned = 1.5 points Benchmarking
63.5% of bags scanned = 2 points Just-in-time (JIT)
89.6% of bags dropped within 20 minutes = 0 points Knowledge of tools
Outliers: 15 bags arriving longer than 25 minutes = 1 point LO 6.1: Define quality and TQM
Total TTC = 4.5 points, so the new total equals 93.5 (including AACSB: Reflective thinking
the 10-point bonus) 3. The lack of quality will manifest itself in room rate reductions,
LO 6.6: Use the seven tools of TQM extra supervision, complaints, and ultimately lower occupancy.
AACSB: Analytical thinking AACSB: Reflective thinking
4. Great question for class discussion: Control charts can be used
3 QUALITY AT THE RITZ-CARLTON HOTEL for tracking customer complaints, Pareto diagrams to find where to
focus improvement efforts, cause-and-effect diagrams to analyze
The Ritz-Carlton video (7 minutes) is available in MyOMLab. the source of causes, in the kitchen, reservations, billing, etc.
As an introductory note, students may appreciate the following: LO 6.6: Use the seven tools of TQM
The cost of poor service is tremendous, and the cost is magnified
by the negative impact unsatisfied customers have on prospective AACSB: Reflective thinking
customers, as noted in the following example from Southwest 5. Some nonfinancial measures of quality might include those
Airlines: noted above: room service, food quality, customer complaints, etc.
AACSB: Reflective thinking